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In Blow to Sprint, T-Mobile, FCC Proposal Would Kill Joint Bid in Auction

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August 04 2014 @ 13:49

The top official of the Federal Communications Commission has tentatively concluded that wireless providers shouldn’t be able to team up in a bid for spectrum, dealing a potential blow to a reported plan between Sprint and T-Mobile.

Ahead of an auction next year for airwaves that are controlled by broadcasters, FCC Chairman Tom Wheeler has circulated a notice of proposed rulemaking that would prevent wireless carriers from submitting a joint bid on spectrum.

Roger Sherman, the FCC’s wireless telecommunications bureau chief, announced the proposal on Aug. 1, just weeks after The Wall Street Journal reported that Sprint and T-Mobile were planning to create a joint venture that would bid in the 2015 auction. The groundbreaking auction will mark the first one since roughly $18.5 billion was raised several years ago in an auction of 700 MHz spectrum. According to the July 15 Journal article, Sprint and T-Mobile are working on a plan to raise roughly $10 billion for the auction.

“Our goal is to promote the participation of as many parties as possible in the auction. If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition,” wrote Sherman, who did not identify the specific carriers in the blog. “Therefore, the item tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed. It also asks questions about such arrangements between providers of different sizes.”

Sprint and T-Mobile have reportedly been considering a potential merger since last year. Neither company immediately responded to a request for comment on the FCC’s blog. CTIA-The Wireless Association had no comment.

In May, the FCC adopted rules governing the so-called incentive auction, which will open up low-band spectrum for wireless providers and give broadcasters an opportunity to relinquish airwaves for a portion of the proceeds.

In the last auction in which T-Mobile participated, it spent $4.2 billion, gobbling up more spectrum than AT&T and Verizon Wireless combined, according to Verizon in a May 6, 2014, filing. The spectrum in the upcoming incentive auction is important to wireless carriers because it can travel longer distances and better penetrate buildings and other obstacles than higher-band spectrum, resulting in lower costs to deploy it, Sprint, T-Mobile USA and others stated in an FCC filing.

“The broadcast TV incentive auction is one of the most significant proceedings in terms of the future of the mobile broadband industry and in terms of maintaining our global leadership in the mobile Internet,” said Scott Bergman, vice president of regulatory affairs with CTIA-The Wireless Association, in a phone interview earlier this year.

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